Brussels, 11 December 2009
EU requests WTO panel over discriminatory taxation of distilled spirits in the Philippines.
The European Union has requested the establishment of a WTO panel on the Philippines' excise tax regime on distilled spirits. The European Union considers that this regime discriminates against imported spirits and is thereby in clear breach of international trade rules. The EU has raised the issue with the Philippines repeatedly over the past years without success and WTO consultations held with the Philippines in Manila on 8 October 2009 failed to lead to a satisfactory solution.
European Trade Commissioner Benita Ferrero-Waldner said: "Unfortunately, WTO consultations have not indicated any clear prospect of a possible remedy to this longstanding tax discrimination against imported spirits. Therefore, the EU has no other option than requesting a WTO panel to rule on this issue. We are convinced the EU will prevail in what is a clear case of tax discrimination but we still hope the Philippine Government would remedy the situation without waiting for the completion of WTO dispute settlement procedures".
European industry has raised concerns since the introduction of a new Excise Tax Regime in the Philippines in 1997. Those concerns became more serious as discrimination against imported spirits aggravated with subsequent reforms of this regime, notably with the introduction of new legislation in 2004. This has had a significant impact on exports of EU spirits to the Philippine market. More specifically, it is estimated that, from 2004 to 2007, EU exports of spirits to the Philippines have more than halved (from around €37 million to €18 million).
The European Union is the Philippines' 4th largest trading partner, accounting for 12% of total trade in goods for a value of € 9 billion. In 2008 the European Union was the top market destination for Philippine merchandise exports (17.3% of the total), the largest source of foreign direct investment (34%) and the largest supplier of foreign commercial loans contracted by the Philippines (48%). During the same period about 18% of Philippine exports entered the EU under the Generalised System of Preferences, a scheme allowing exports from developing countries to benefit from lower duties, while another 70% benefited from duty-free treatment on a most-favoured nation basis. The European Union remains the 5th largest source of Philippine merchandise imports behind China, Japan the US and ASEAN countries.